Was it Suicide, or Is Samuel Israel on the Run?

Israel, cofounder of the Stamford, Ct. hedge fund Bayou Group LLC, was reportedly on his way to the Massachusetts federal prison to begin serving a 20-year sentence for defrauding Bayou investors of more than $400 million.

But when his abandoned car was found near the Bear Mountain Bridge with the message “Suicide is Painless” written on the windshield, it seemed he’d chosen to take his own life instead.

A body, however, has not been found, and officials believe there is a possibility that Israel could be on the run.

“It looks like it could be either a suicide or a staged suicide, a fake suicide,” said police investigator Bruce Cuccia. “Without a body, we don’t have conclusive evidence either way.” Cuccia said that no one reported seeing a jumper Tuesday.

Israel, 48, along with Bayou chief financial officer Daniel E. Marino, pled guilty to fraud charges in September 2005. Israel had shut down the hedge fund only months before, admitting it was a fraud.

Following the public scandal, Marino, who was also sentenced to 20 years in jail, wrote a six page “suicide note and confession,” although he never followed through on his suicide threat. Authorities used the information in the letter in the ensuing investigation.

Police aircraft and boats were still searching the river Wednesday for Israel’s body.

Kevin Conway, an attorney representing a man who invested $300,000 in Bayou said that, given the severity of the crime and sentence, he wasn’t surprised at Israel’s disappearance. “The sentence was for 20 years, and in the federal system, there is no parole,” he said. “That means when he gets out he’d be close to 70.” The message written on Israel’s windshield, “Suicide is Painless,” is the song that was sung during a fake suicide in the movie “M*A*S*H.”

Israel and Marino pleaded guilty to conspiracy, wire fraud and investment advisory fraud in September 2005. Israel admitted sending out false financial information to investors “which made it appear that Bayou was doing better than it really was.”

Marino’s confession began by describing events in December 1998 on the last day of a bad year in the markets. Bayou’s losses had overwhelmed its gains for the previous two years. “The solution, devised by Mr. Israel and a lieutenant, James Marquez, was simple: produce a fake audit of the funds’ performance and try to make up the losses next year,” reported The New York Times in a story about Marino’s note.

Kirk Wright, who was convicted of a fraud scheme through his firm, International Management Associates, that cost investors tens of millions of dollars, was found dead in his jail cell in Georgia on May 24. Wright, who was awaiting sentencing and was expecting a lengthy prison term, had hanged himself. The death was immediately ruled a suicide.

In January 2002, former top Enron executive Cliff Baxter was found shot dead in his car after agreeing to testify before Congress in the case against the corporation. Although his death was ultimately determined to be a suicide, police at first investigated the possibility of murder.

When Japanese Internet company Livedoor allegedly inflated its finances to report a profit instead of a loss in January 2006, scandal ensued. The situation grew worse when Hideaki Noguchi, a businessman and close associate of Livedoor founder Takafumi Horie, was found dead of apparent suicide soon after the news broke.